Four ways to guide Australian businesses to net zero

A new RMIT report says business needs more support to achieve net zero emissions, including more stringent and consistent reporting, re-introducing carbon pricing, and reforming the carbon credit systems.

Key points:

  • Australian businesses are calling out for the Australian Government to give more clarity and guidance on how to reduce emissions.
  • New RMIT report shows how Government can support, regulate and  incentivise businesses to effectively work towards net-zero carbon emissions by 2035 target.

With more than 70% of Australia’s carbon emissions coming from the business sector, there is an overwhelming consensus that clearer and more consistent Government policy  is needed to support and guide businesses to align with the 2015 Paris Agreement.

The new report from researchers at RMIT University highlights how the Australian Government could draw on the latest scientific expertise and existing knowledge to provide a clear path forward for businesses to reduce their emissions.

Lead author of the report and climate change theme leader at RMIT’s Business and  Human Rights Centre, Dr Leanne Morrison, said that while many Australian businesses are developing their own policies, they would welcome clearer Government guidance and more consistent nationwide regulation.

“Through interviews with sustainability and climate change managers in many large Australian companies, we keep hearing that they are establishing their own emissions policies,” she said.

“It is clear that there’s a real lack of guidance at the national level and much of the public discourse purporting that businesses don’t want more regulation or restrictions is incorrect.

“Actually, our research in recent years suggests that there’s a big call from the business sector for greater regulation and guidance because anything they do on their own is riskier.

“Australian businesses are not sure how policy will change in the future so it can feel like they are on shifting sands.

“Strong policies at the national level would actually be really helpful and help their bottom line too.

“We are calling on the Australian Government to embrace these recommendations as a concreate pathway towards a national net zero emissions target.”


1. Working towards a national target of net zero by 2035

Given that Australia’s carbon budget has been largely ‘spent’ over recent years, an effective target that meets our international obligations to the Paris Agreement has become  urgent. A national emissions target which is internationally accepted to be in accordance with the Agreement is one that aims for net zero by 2035.

2. Reintroducing a carbon price mechanism

A carbon price would be the most effective way to meet a national target of net zero by 2035. It would allow Australian exports to avoid attracting international carbon duties, that would significantly impact their competitiveness in global markets.

3. Mandated corporate carbon reporting mechanisms including:

a. Reporting on absolute emissions -calculations based on the Greenhouse Gas (GHG) Protocol.

b. Mandatory reporting of Scope 3 emissions

Scope 3 emissions are not emitted by the company directly, but associated with activities such as purchased materials, and with products once they have been sold. For example for a coal mining company, their Scope 3 emissions would include emissions from their customers burning that coal.

c. Audit and assurance of emissions reporting

Regulations should mandate a standard for all Australian reporting entities to use mechanisms for carbon management and reporting emissions, which should be externally audited by independent parties to ensure completeness and confidence.

4. Reform of carbon credit systems

a. Robust oversight by independent body

b. Include Indigenous land management practices as a carbon credit method

Developing a more robust mechanism for overseeing carbon credit systems is needed.

The system should also include Indigenous land management practices as a legitimate form of carbon credit calculation, based on Indigenous wisdoms and research. Traditional land management practices provide an effective and equitable process for reducing and absorbing carbon, and represent some of the best practice in carbon credit systems. Indigenous-led knowledges should be referred to in the first instance.

Carbon credit systems should be assured by credible independent parties, and based on scientific evidence of overall reduction or absorption of carbon, in addition to existing levels.

This assurance should be updated regularly according to advances in climate science.

Download the full report here.

About Prof Janek Ratnatunga 1129 Articles
Professor Janek Ratnatunga is CEO of the Institute of Certified Management Accountants. He has held appointments at the University of Melbourne, Monash University and the Australian National University in Australia; and the Universities of Washington, Richmond and Rhode Island in the USA. Prior to his academic career he worked with KPMG.